4 ms·

Deutsche Bank is ok...the fun will start when an Italian (any Italian) bank becomes wobbly

by pestatije 4y ago

jaclaz 4y ago
Can you explain/provide some more details?
- pestatije 4y ago
  It'd be the repeat of the euro debt crisis [3] but with far higher inflation [3] https://en.m.wikipedia.org/wiki/European_debt_crisis https://en.m.wikipedia.org/wiki/European_debt_crisis
  - jaclaz 4y ago
    But why italian banks (and not - say - french or spanish or other countries, like the ones involved in the 2009-2010 crisis), are they (the italian banks) more fragile/exposed than other countries' banks?
    - expertentipp 4y ago
      The largest economy from among so called PIGS?
  - okeuro49 4y ago
    From what I understood of reading Varoufakis's "Adults in the Room" the French and German banks were every bit as risk during the euro debt crisis, as they had bought government debt from PIGS countries. The issue was painted as profligate borrowing by PIGS, but was just as much an issue in keeping up the pretence that the PIGS (G in particular) weren't in fact bankrupt, and the German and French banks accordingly in deep trouble. Hence the subsequent demand for brutal austerity, as this was the only policy option when you can't default and devalue your own currency, nor persuade the taxpayers of other euro countries to bail you out.
    - epups 4y ago
      But they did get a bail out. And Greece was indeed on the verge of bankruptcy.
      - okeuro49 4y ago
        As I understand, Greece _was_ bankrupt. The citizens did not get bailed out, they got brutal austerity. The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt. If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports. It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
        epups 4y ago
        I know Varoufakis' take on the Greek crisis. I think he's mostly correct on the fact that having a common currency without a correcting mechanism will inevitably lead to these issues. However, Greece benefitted enormously from being part of the eurozone too. And the fact is that it borrowed cheaply and invested that money badly. The bail out was there, the invrstors had to agree to a "haircut" and new credit lines were given to Greece (indeed under austerity, which I also found counterproductive). I think I mostly don't disagree with you, just offering a slightly different perspective too.
0x_rs 4y ago
>Deutsche Bank is ok It's not. It's an infamous bank for not only poor management already mentioned in the comments but also massive, ruthless criminal scandals, among which for example laundering 10 billions to Russia [0]. Perhaps DB is truly too big to fall, but I don't see what (any) italian bank has to do with it. As soon as CS started faltering many put their eyes on DB. 0. https://www.nytimes.com/2017/01/30/business/dealbook/deutsche-bank-fined-for-helping-russians-launder-10-billion.html https://www.nytimes.com/2017/01/30/business/dealbook/deutsch...
kwere 4y ago
Italian systemic banks are fine and the permanent sick institutions are already on a watchlist/chopping block/Merger. (minor) Troubles could arise from local banks as they are too dependent from real estates values (NPL) and weak to shadow interests such as corrupted practices from executive and dealings with corrupt politicians / businessmens / mafia

Deutsche Bank is ok...the fun will start when an Italian (any Italian) bank becomes wobbly

jaclaz 4y ago

Can you explain/provide some more details?

pestatije 4y ago
It'd be the repeat of the euro debt crisis [3] but with far higher inflation [3] https://en.m.wikipedia.org/wiki/European_debt_crisis https://en.m.wikipedia.org/wiki/European_debt_crisis
- jaclaz 4y ago
  But why italian banks (and not - say - french or spanish or other countries, like the ones involved in the 2009-2010 crisis), are they (the italian banks) more fragile/exposed than other countries' banks?
  - expertentipp 4y ago
    The largest economy from among so called PIGS?
- okeuro49 4y ago
  From what I understood of reading Varoufakis's "Adults in the Room" the French and German banks were every bit as risk during the euro debt crisis, as they had bought government debt from PIGS countries. The issue was painted as profligate borrowing by PIGS, but was just as much an issue in keeping up the pretence that the PIGS (G in particular) weren't in fact bankrupt, and the German and French banks accordingly in deep trouble. Hence the subsequent demand for brutal austerity, as this was the only policy option when you can't default and devalue your own currency, nor persuade the taxpayers of other euro countries to bail you out.
  - epups 4y ago
    But they did get a bail out. And Greece was indeed on the verge of bankruptcy.
    - okeuro49 4y ago
      As I understand, Greece _was_ bankrupt. The citizens did not get bailed out, they got brutal austerity. The German and French banks, who were exposed to Greek debt, got bailed out, by pretending that Greece was not bankrupt. If Greece was a sovereign state, they would have defaulted, and the banks would have likely failed. The drachma would devalue and Greeks would have hopefully recovered by virtue of cheaper exports. It says a lot about the French-German hegemony in Europe that Greece was propped up for the sake of European banks, and its citizens treated to the worst austerity since WW2 (discussed in the book).
      - epups 4y ago
        I know Varoufakis' take on the Greek crisis. I think he's mostly correct on the fact that having a common currency without a correcting mechanism will inevitably lead to these issues. However, Greece benefitted enormously from being part of the eurozone too. And the fact is that it borrowed cheaply and invested that money badly. The bail out was there, the invrstors had to agree to a "haircut" and new credit lines were given to Greece (indeed under austerity, which I also found counterproductive). I think I mostly don't disagree with you, just offering a slightly different perspective too.

0x_rs 4y ago

>Deutsche Bank is ok It's not. It's an infamous bank for not only poor management already mentioned in the comments but also massive, ruthless criminal scandals, among which for example laundering 10 billions to Russia [0]. Perhaps DB is truly too big to fall, but I don't see what (any) italian bank has to do with it. As soon as CS started faltering many put their eyes on DB. 0. https://www.nytimes.com/2017/01/30/business/dealbook/deutsche-bank-fined-for-helping-russians-launder-10-billion.html https://www.nytimes.com/2017/01/30/business/dealbook/deutsch...

kwere 4y ago

Italian systemic banks are fine and the permanent sick institutions are already on a watchlist/chopping block/Merger. (minor) Troubles could arise from local banks as they are too dependent from real estates values (NPL) and weak to shadow interests such as corrupted practices from executive and dealings with corrupt politicians / businessmens / mafia